Avita signals revenue recovery with $70M–$74M 2025 outlook following reimbursement clarity

Earnings Call Insights: AVITA Medical, Inc. (RCEL) Q3 2025

MANAGEMENT VIEW

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Cary Vance, Interim CEO, opened by acknowledging the challenging quarter and outlined, "We reported approximately $17 million in revenue, below expectations and reflecting the ongoing impact of reimbursement disruption that began earlier in the year." Vance detailed the resolution of a key headwind: "As of today, all 7 MACs have now published or confirmed acceptance of provider reimbursement rates, providing clinicians with clarity and confidence of payment when using RECELL." He also highlighted a revised full-year revenue guidance: "We now expect full year revenue in the range of $70 million to $74 million, down from our prior guidance of $76 million to $81 million."

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Vance emphasized renewed commercial focus: "Under my leadership, we've moved quickly to refine our commercial organization, aligning structure, territories and accountability around our highest value accounts." He cited a sharpened go-to-market strategy, stating, "Roughly 90% of our revenue today comes from about 200 burn centers and trauma hospitals... We're currently serving about 5% of that segment, giving us significant runway for penetration and growth."

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Product developments included RECELL GO's first European patient treatment following CE Mark approval and ongoing U.S. market penetration for Cohealyx and PermeaDerm. Vance shared, "Cohealyx continues to emerge as a complementary growth driver. VAC submissions are underway in roughly 1/3 of our target accounts."

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David O'Toole, CFO, stated, "For the third quarter, commercial revenue was $17.1 million compared to $19.5 million in the same period last year, a 13% year-over-year decline." He reported, "Total operating expenses were $23 million, down from $30.2 million in Q3 2024, a reduction of $7.2 million or 24% year-over-year."

OUTLOOK

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AVITA now projects full-year 2025 revenue in the range of $70 million to $74 million, compared with the previous guidance of $76 million to $81 million, attributing the adjustment to "the slower-than-anticipated timing of reimbursement normalization, as well as our measured expectations for RECELL demand returning and utilization through year-end" (CFO O'Toole).

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The company plans to provide updated 2026 revenue guidance in early Q1 2026, with Vance stating, "We'll provide an update on financial outlook, including 2026 revenue and guidance, in early Q1, ensuring that our guidance reflects both operational progress and our capital strategy."

FINANCIAL RESULTS

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Third quarter commercial revenue was $17.1 million. Gross profit margin for the quarter was 81.3%. Operating expenses totaled $23 million. Net loss for the quarter was $13.2 million or ($0.46) per basic and diluted share. Cash, cash equivalents and marketable securities at the end of September were $23.3 million.

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O'Toole reported, "Operating loss for the quarter improved by 34% year-over-year, decreasing to $9.2 million from $13.8 million in the prior year period."

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The company highlighted a 40% quarter-over-quarter reduction in operating cash use, from $10.1 million in Q2 to $6.2 million in Q3. A $13.8 million private placement in August bolstered the balance sheet.

Q&A

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Ross Osborn, Cantor Fitzgerald: Asked about forecasting initiatives. Vance explained, "It gets all the way down to the rep level, to the customer level and understanding how our customers are utilizing the products and then, in turn, how they intend to purchase the products and what kind of cadence that is."

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Osborn: On balancing European expansion with U.S. focus. Vance responded, "Our primary focus is the U.S. We're laser-focused on the U.S.... I don't believe we're going to be bifurcated or distracted at all by what we're doing in other countries outside the U.S."

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Joshua Jennings, TD Cowen: Asked about reimbursement normalization and expected account recovery. Vance said, "We're in earnest trying to get them up to speed so that not only the physicians, but those that are filing the claims are aware of what they need to do and feel confident about it." O'Toole added, "The MACs are going to adjudicate all of those claims going back to January that are still outstanding."

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Jennings: Inquired about Cohealyx VAC approvals. Vance stated, "We have about 1/3 of our accounts that have -- that are in the VAC, and about 2/3 of those are scheduled to come out of the VAC in the fourth quarter."

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Chris Kallos, MST: Asked about expense structure and further reductions. O'Toole responded, "We don't think there are any more additional reductions in expenses that need to happen."

SENTIMENT ANALYSIS

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Analysts' tone was inquisitive but neutral, focusing on operational recovery, expense control, and strategic priorities, with no overt skepticism or negativity present in the questions.

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Management maintained a constructive and confident tone throughout, emphasizing clarity, renewed focus, and execution. Vance reflected optimism: "There's really strong evidence that AVITA and our products are going to make a growth move in 2026."

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Compared to the previous quarter, sentiment shifted from concern over reimbursement delays and revenue headwinds to a more resolute and action-oriented posture, with both analysts and management seeking evidence of stabilization and future growth.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for 2025 revenue was lowered from $76–$81 million in Q2 to $70–$74 million in Q3, reflecting slower reimbursement normalization.

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The management team changed, with Cary Vance assuming the Interim CEO role, replacing James Corbett.

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Strategic focus tightened toward the core 200 U.S. burn and trauma centers, representing the immediate growth opportunity. Execution priorities shifted from broad expansion to targeted re-engagement and disciplined commercial execution.

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Analysts' questions shifted from troubleshooting reimbursement bottlenecks to probing execution, forecasting improvements, and the evolving expense structure.

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Management confidence increased, focusing on cost discipline gains and a clear path to revenue recovery.

RISKS AND CONCERNS

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Management cited reimbursement timing and the pace of hospital VAC reviews as ongoing challenges impacting near-term results.

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The company is monitoring the speed with which accounts regain confidence in RECELL reimbursement and the conversion of VAC submissions to orders.

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O'Toole noted, "We are also evaluating capital funding options to ensure AVITA has sufficient resources to support operations through cash flow breakeven."

FINAL TAKEAWAY

Management highlighted that while Q3 was marked by transition and revenue pressure due to reimbursement disruption, the resolution of national MAC reimbursement rates for RECELL, a leaner cost structure, and sharpened commercial focus provide the foundation for renewed growth. The company expects operational progress and capital strategy alignment to enable recovery in 2026, supported by disciplined execution and a targeted approach to market penetration within its core burn and trauma center segment.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/rcel/earnings/transcripts]

MORE ON AVITA MEDICAL

* AVITA Medical, Inc. (RCEL) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4839881-avita-medical-inc-rcel-q3-2025-earnings-call-transcript]
* AVITA Medical: Reimbursement Reset And Breakeven Path By 2026 [https://seekingalpha.com/article/4823940-avita-medical-stock-reimbursement-reset-breakeven-path-2026]
* AVITA Medical, Inc. (RCEL) Presents At Morgan Stanley 23rd Annual Global Healthcare Conference (Transcript) [https://seekingalpha.com/article/4820694-avita-medical-inc-rcel-presents-at-morgan-stanley-23rd-annual-global-healthcare-conference]
* AVITA Medical Q3 2025 Earnings Preview [https://seekingalpha.com/news/4516176-avita-medical-q3-2025-earnings-preview]
* AVITA Medical appoints Cary Vance as interim CEO [https://seekingalpha.com/news/4505060-avita-medical-appoints-cary-vance-as-interim-ceo]